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Amendments to of the General Law of Commercial Companies regarding dissolution and liquidation of companies

On January 24th, 2018, the Mexican Ministry of Economy published in the Official Gazette of the Federation several amendments to the General Law of Business Organizations, in connection with the process to dissolve and liquidate companies incorporated under such law. Such amendments will come into full force and effect as of July 25, 2018.

The most relevant amendments include the following:

Judiciary intervention. A competent judge can make the appointment of liquidators, and revoke them at the request of any partner or shareholder who justifies the existence of a serious cause for dissolution or liquidation.

New causes of dissolution. A judicial or administrative resolution issued by the competent courts in which a company is instructed to be dissolved is added as a new cause of dissolution and liquidation of commercial entities.

New simplified procedure for dissolution and liquidation. A new simplified process to dissolve and liquidate a company is established for companies that meet certain requirements, such as (i) that the company is formed exclusively by partners or shareholders who are individuals; (ii) that the company has not issued invoices during the last two years; and (iii) that the company is up to date in compliance with it's fiscal, labor and social security obligations, among others.

This simplified dissolution and liquidation process includes several benefits. As instance, it will no longer be necessary to formalize the act in which the liquidation agreement is approved before a notary public.

The simplified process of dissolution and liquidation of companies promotes the dynamic efficiency of the market by facilitating the exit of inefficient companies, promoting the reuse of resources in more productive activities.

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